The Southeast Asian region continues to remain a hotbed for investments by corporates and investors. Mergers and acquisitions (M&As), despite pacing down in 2018 due to global headwinds, picked up in the ongoing year in most countries. Buoyed by the rapid economic growth of the region as a whole, there has been an unprecedented increase in M&A activity, driven by big-ticket deals. Financial services, consumer retail, real estate, infrastructure and technology have been the most favoured industries. Besides Singapore and Malaysia, there has been a surge in M&A deals in Indonesia, Thailand and Vietnam.

Overall M&A trend

Cross-border M&As in ASEAN rose by 6 per cent, from $17 billion in 2017 to $18 billion in 2018, following their 124 per cent increase between 2016 and 2017. M&A from developed countries fell by 78 per cent to $2 billion in 2018, which contrasted with 2017, when companies from developed countries made nearly $10 billion in acquisitions and contributed to 58 per cent of total net M&A sales. However, a 126 per cent rise in M&A activities from developing economies, to $15 billion, pushed up the total value of deals in the region. This growth was due to a single megadeal by a Chinese company, which accounted for 65 per cent of total net M&A sales in ASEAN in 2018. Nesta Investment Holdings (China) acquired Global Logistic Properties (Singapore), the largest warehouse operator in Asia, for $11.6 billion. Aside from M&As by Chinese companies, intra-ASEAN M&As rose and transactions by Korean companies doubled from $316 million in 2017 to $630 million in 2018.

   The total number of deals fell from 496 in 2017 to 456 in 2018. Companies from Japan and Singapore made the largest number of deals (76 each), followed by Malaysia (41), the US (38) and China (34). Singapore and Malaysia accounted for nearly 60 per cent of the number of deals in 2018 because of their relatively more mature M&A environment. Indonesia and Thailand were the next most active countries for M&A activities last year. The number of megadeals exceeding $500 million was the same as in 2017 (i.e., 16 megadeals). In 2018, the 16 megadeals contributed to a total value of $30 billion, while the total value of megadeals in 2017 contributed $22 billion worth of transaction values.

Intra-ASEAN M&A activities rose slightly, from $825 million in 2017 to $992 million in 2018, which is still short of the levels recorded in 2015 and 2016. However, the number of intra-ASEAN M&A deals rose from 41 in 2016 to 56 in 2017 and 95 in 2018. Singapore companies were the most active acquirers of assets in ASEAN, with more than 50 per cent of intra-ASEAN M&A deals in 2018. Malaysian companies (25 per cent) were the second most active acquirers, followed by companies from the Philippines (11 per cent). Nearly 80 per cent of all intra-ASEAN M&A activities were in the services industry, and 30 of the 95 intra-regional acquisitions were made in Malaysian operations, followed by 26 in Singapore and 14 in Indonesia. Manila Water’s (Philippines) acquisition of a 19 per cent stake in Eastern Water Resources Development and Management (Thailand) for $167 million was amongst the big-ticket deals in 2018.

Scenario in the first half of 2019

According to KPMG, during the first half (H1) of 2019, there were 162 M&A deals in ASEAN with a total deal value of $42.3 billion. In the first quarter of 2019, global market uncertainty resulted in a 31 per cent fall in the number of deals from the immediately preceding quarter; however, the total deal value increased by 145 per cent on account of megadeals in the region. In the second quarter, the deal value normalised with the deal volume further falling by 9 per cent from the first quarter. This is due to the US-China trade war, which had a negative impact on ASEAN member countries. Moreover, there were elections in some ASEAN countries, which reduced investors’ appetite as they were in a wait-and-watch mode during this period of uncertainty.

Singapore and Thailand accounted for 68 per cent of all the deals in the region led by two sectors, namely, real estate, infrastructure and construction, and financial. Some of the key deals are CapitaLand’s acquisition of Ascendas-Singbridge for $8 billion, acquisition of Murphy Oil’s assets in Malaysia by Thailand’s PTT Exploration and Production Public Company Limited for $2.1 billion and the acquisition of Holcim Philippines by San Miguel Corporation for $1.8 billion.


The country’s M&A market was buoyant in 2019, bucking the overall M&A downtrend in Asia (excluding Japan). Singapore is also experiencing an increasing number of start-up funding, pushing up the number of deals in the telecom, media and technology (TMT) sector. Besides, the equity capital market was driven by the listing of real estate investment trusts (REITs), which amounted to $1.4 billion during the January-September period of 2019, quadrupling from $315.6 million in full 2018. The largest Southeast Asian initial public offering was the Prime US REIT at $833 million. Meanwhile, overleveraged businesses are seeking to sell non-core assets in a bid to decrease their gearing. Going forward, REITS and companies in the technology, food and beverage, and healthcare sectors are likely to ride on the country’s M&A wave.


Thailand saw a resurgence of inbound and domestic deal-making activity in the ongoing year owing to robust economic performance. As an established destination for inbound foreign direct investment, Thailand’s M&A will remain strong due to a number of tailwinds including the government’s Thailand 4.0 Economic Plan, the ongoing integration of the ASEAN Economic Community and the country’s continued development from an emerging economy to a stronger regional and global player. Food and beverage, fast moving consumer goods (FMCG) and industrial products are the key sectors of interest. Consolidation is expected to continue in the financial services, infrastructure and technology sectors. Inbound investments are likely to be driven by private equity (PE) and venture capital funds, along with strategic corporates and other global initiatives such as China’s Belt and Road Initiative.


Indonesia-focused assets have been of significant interest to regional PE investors, particularly growth capital in the internet and technology sector. M&As have also rebounded as corporates are now spending cash on balance sheets; however, the area is still dominated by a few megadeals in the country. This made domestic corporates the main drivers of the Indonesian M&A market in 2018, leapfrogging them over foreign acquirers. The majority of these deals focused on acquiring new capabilities or opening up new product or service segments, rather than making companies bigger or generating cost synergies. Indonesia remains a key destination for PE investment and a potential M&A growth area.


Malaysia experienced a slowdown in PE investments in 2018 with moderate corporate M&A activity, largely due to macro and political uncertainty in the lead-up to the election. Of the major deals that occurred, 70 per cent were in industrials, TMT and financial services, largely focusing on deals outside the country. While Malaysian corporates were less active in domestic M&A in 2018, with fewer local acquisitions in the local market, there were sizeable M&A transactions abroad. Regardless of this trend, domestic corporates will be key drivers of Malaysia’s M&A market, and are encouraging a rethink of the current environment. Further, the government has recently reinstated large-scale projects that were previously thought to be cancelled. This is likely to foster confidence among foreign investors, which in turn will drive M&A activity in the country.


In 2018, the value of each M&A transaction in Vietnam remained smaller than the regional average, standing at $5 million. Small- and medium-sized deals accounted for 90 per cent of all M&A deals in the country, and bigger transactions of $10 million and above were carried out by foreign investors with deep pockets. In fact, four countries dominated Vietnam’s M&A market – Thailand, Singapore, South Korea and Japan. Companies from these acquiring countries have a number of strategic differences. Thailand, for instance, has shown keen interest in Vietnam’s booming consumer sector as evident in the buying spree of leading consumer companies like Big C and Metro Cash & Carry. The South Koreans, however, made their mark last year as enthusiastic M&A investors in banking, insurance and financial services. The targets for these investments were Maritime Securities, Nam An Securities, etc. Singapore mostly focused on real estate and Vietnam’s tech start-ups. Japanese investors have been interested in banking/consumer finance, transportation and real estate. The pattern is expected to continue for the next one to two years.


While M&As may be an attractive option in Southeast Asia, the region’s regulatory environment is very complex, the bureaucracy is very inconsistent and there are several restrictions on foreign ownership. As a result, achieving strong returns on investment is not always easy for foreign investors. Finding the right partner is very crucial. To make M&As work, companies must undertake a comprehensive due diligence exercise. In addition to due diligence, the management must engage in a higher level of scrutiny of sellers and co-investors. In sum, the Southeast Asian region is being seen as an important market for strategic tie-ups and inorganic growth.